South Korea's Samsung is still the world's biggest smartphone maker, but some industry analysts suggest that the company may start setting its eyes somewhere else as the Japan-South Korea dispute ensues.
According to CNBC, the already chaotic trade war could further escalate if Japan pushes through with reported plans to remove South Korea from its white list. If this happens, industry experts believe Samsung will be forced to sources its tech equipment from other countries.
Samsung is currently one of the biggest buyers of high-tech materials that Japan sells. The materials in question are vital in manufacturing gadget memory chips. Since Tokyo has ordered restrictions on exports of the said equipment, South Korea's biggest smartphone maker may be on the rocks in terms of supply.
Managing Director and Senior Analyst at Sanford C. Bernstein, Mark Newman, believes that Samsung will have to select its supply chain partners carefully. The South Korean tech giant has quality control standards that trading partners need to adhere to before trade is secured.
"They need to quality those alternatives," Newman said of the possibility that the restricted equipment from Japan will now have to be sourced from other importing countries.
Newman further explained that under these scenarios, Samsung's memory chip inventory may be reduced to a certain extent. This is because the company will have to find reliable trading partners for chip equipment supplies.
Aside from Samsung's potential slowdown in production, there is a big chance chip prices will go up, Newman pointed out. Since Samsung is one of the world's biggest chip makers, it is only understandable that the firm's weaker production could push prices that buyers may not be happy about.
Meanwhile, some industry experts believe the Japan-South Korea trade war could open opportunities for Apple to finally overtake its biggest rival in the smartphone sector.
Vice President of mobile solutions company Valid, Rolando Hernandez, said Apple can finally have a reasonable edge over Samsung in terms of "supply chain perspective," Forbes reported.
Industry experts are expecting Chinese smartphone companies and other non-Asian providers to win in the ongoing Japan-South Korea trade dispute if it rages on until the second half of 2019.
It remains to be seen how the tensions will affect both Samsung and Apple. However, The Korea Herald reported on Thursday that the day's meeting did not result in anything significantly positive.
Negotiators from both sides reportedly did not materialize well, potentially leading to Japan removing South Korea from its list of reliable trading allies. The Japanese government has yet to confirm the reports.
